Key Highlights
- India's new EV policy reduces import duty to 15% for companies investing ₹4,150 crore in local manufacturing within three years.
- Approved firms can import up to 8,000 electric vehicles annually at the reduced rate, provided each vehicle's CIF value is at least $35,000.
On Monday, the Indian government released detailed guidelines for its scheme to promote the production of electric passenger vehicles. Companies investing at least ₹4,150 crore in manufacturing units in India can now import up to 8,000 electric cars annually at a 15% duty. Currently, this duty ranges from 70% to 100%.
Although the scheme was first announced on March 15, 2024, the Ministry of Heavy Industries has now released the complete set of guidelines, allowing car manufacturers to prepare for application. According to officials, the application window will likely open in the coming weeks and will last at least 120 days.
Import duty benefits for approved applicants
"To encourage global manufacturers to invest in the Scheme, approved applicants will be able to import Completely Built-in Units (CBUs) of e-4W with a minimum CIF value of $35,000 at a 15% customs duty for a period of five years from the application approval date. According to an official statement, approved applicants must invest a minimum of ₹4,150 crore as per the scheme's provisions.
The maximum duty foregone per applicant is capped at ₹6,484 crore or their investment under this scheme.
Investment and local manufacturing requirements
The ministry requires companies to invest ₹4,150 crore (approximately $500 million) within three years of approval. During this time, they must also establish manufacturing facilities and begin producing electric four-wheelers (e-4Ws).
New plants, machinery, equipment, associated utilities, and engineering research and development (ER&D) are all eligible expenses for investment benefits. Land-related costs are excluded, but new buildings for the main plant and utilities are permitted as long as they do not exceed 10% of the total committed investment.
Furthermore, companies can set aside up to 5% of their investment for charging infrastructure.
The scheme requires at least 25% domestic value addition (DVA) within three years of approval. By the fifth year, this must have increased to at least 50%.
To demonstrate commitment to the scheme, each applicant must provide a bank guarantee from a scheduled commercial bank in India. The guarantee should cover the total import duty to be waived or ₹4,150 crore, whichever is higher.
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Application fees and revenue criteria
The application process requires a non-refundable fee of ₹5 lakh. In addition, to qualify for the scheme, businesses must meet certain financial criteria:
- Automotive manufacturing generates a minimum global revenue of ₹10,000 crore.
- Minimum global fixed asset investments of ₹3,000 crore, based on the most recent audited financial statements at the time of application.
The ministry will accept applications for 120 days (or longer if necessary) each time the application window is open. This process can continue until March 15, 2026, giving companies multiple opportunities to apply.
